Appraisal House Blog

I'm annoyed today.  I received two conflicting pieces of information on what has been going on with the HVCC.  The first came from an appraiser friend in Maryland, who received an email from their state board representative who was at a national meeting of the appraisal foundation.  That email said:

I know you are all concerned about the HVCC that resulted from the FannieMae/FreddieMac agreement with the State of New York.

From what I could learn at The Appraisal Foundation’s Board of Trustees meeting, it is highly unlikely that the HVCC will go into effect on January 1 of next year. We know that Fannie and Freddie have a new Federal oversight manager, which will certainly want to review all their policies and procedures and is unlikely to simply tell them to keep doing everything they have been doing – especially since the head of one of the Federal Financial Regulatory Agencies, the Comptroller of the Currency, sent a comment letter saying the agreement exceeded their authority because it allowed one state to set policy for banks throughout the country. Furthermore, mortgage legislation passed in the house that affected appraisals had not yet gotten through the Senate when the current financial crisis hit big time and pushed everything else onto the back burner. It is not likely to be taken up until Congress resumes after the holidays. When it is revisited, it is highly likely that the HVCC will turn out to be much different than originally drafted, if it survives at all.

As of a few days ago, Fannie Mae and Freddie Mac were still waiting to hear from the Federal Housing Finance Agency if there will be a revised Home Valuation Code of Conduct released and if so, what the time for implementation will be. The last public comment made by FHFA Director James Lockhart – that indicated FHFA was planning to release a revised HVCC sometime in October – is the last thing the GSEs have heard, according to agency representatives.

So, good news for us all, right?  But later that day I got an email from a loan officer that sent me a message she got from Wells Fargo, essentially stating that if she wanted to send loans to Wells Fargo, she had to use an AMC.

As our industry evolves and new requirements unfold, Wells Fargo Wholesale Lending is committed to working with our clients to institute necessary changes that will restore confidence, maintain integrity, ensure fair and responsible lending and help sustain the mortgage lending business long term.
As we look ahead, one such potential change stems from the Home Value Protection Code, regarding procurement of appraisals. There is uncertainty around timing and the ultimate requirements that may result from the code, and we are diligently working to clarify those issues. Preparing now will help ensure a smooth transition for all of us later.
In anticipation of these changes, the preferred process we are establishing allows you to request appraisals through RESdirectSM who will order appraisals from one of four approved Appraisal Management Companies (AMC) that you select: Rels Valuation, LSI®, MDA Lending SolutionsSM or Fiserv®. To use this process, you must have an account with RESdirect and your selected AMC(s).

It also goes on to say that you can use your own appraiser, BUT:

(borrowed from www.thejokeshop.org)

An appraiser is one who compiles and analyzes voluminous data of problematical accuracy from sources of dubious veracity and derives therefrom a numerical quantification of unquestionable necessity, analogous to a nebulous and euphemistic concept representational of value commensurate with ambient configurations of the open market and promulgates thereby a precise written declamation which delineates his observation, deliberations and conclusions all done while he feigns absolute ignorance of the avaricious machinations of Buyers, Sellers, Brokers and Lenders, compensated only by that penurious stipend known as the professional fee.

Top 10 Reason to Become An Appraiser

1. Dazzle your friends with your knowledge of external obsolescence.
2. The wonderful world of rats, bats, and spiders.
3. Be a part of the profession blamed for the collapse of the savings and loan industry and the recent credit crisis and/or sub-prime meltdown.
4. See places in people’s houses that usually require a search warrant to access.
5. Arouse the suspicion of an entire neighborhood when inspecting comparable sales.
6. Chance to really irritate annoying real estate salespeople.
7. Walk around holding a clipboard just like “Skip” down at the Jiffy Lube.
8. Spend hours writing volumes of supporting documentation to justify the market value of a property you already decided on when you pulled into the driveway - and that no one will ever read anyway.
9. See that some people really do hang those black velveteen pictures of Elvis on their living room walls
10. Be one of a handful of people who know that USPAP is not a medical term.

I was appraising a house a few days ago that was on several acres.  A very nice house in a suburban area, with all the requisite toys - greta pool with water slide, a separate pool house with wet bar, firepit/conversation area, large playscape, detached studio, etc.  I noticed that there was a large stone fence across the back yard that separated the house and maybe an acre of land from the rest of the property.  I saw that the was a barn down there, and so went through the gate to go measure it.  There were a few mid sized lawn tractors and a 4-wheeler in the barn, and I figured that the purpose was just to house this equipment.  As I was measuring the barn (roughly 15' x 35'), I turned a corner and came face to face with a small donkey.  I'm not sure which of us was more startled!  He jumped a little and then moved off the other way, and I went back to my measuring thinking that maybe there were a few other donkeys around, and to watch where I was stepping.

As I finished the measurement, I was taking a few notes and something made me look up.  In front of me about 10 yards away was a full sized llama.  Now, I have a friend that owns a few, but I have no real knowledge of them, and certainly no idea how to interact with them.  I figured he would just move away like the donkey had done.  So I was therefore a little distressed to see him start moving towards me at a pretty good pace.  As he came closer and closer without slowing down, my train of thoughts ran something like this:

1. Is it going to try and kick or bite me?  I can't tell if it looks angry, but it sure is coming at me pretty fast!
2. Can I just push it away?  No, it's too big and coming too fast.  Maybe I could punch it to slow it down?  Could I wrestle it?
3. The owners are not going to be happy if I hurt their llama.  Okay, brace yourself and be prepared to get medical attention.

This llama just came right at me, never slowing down.  It's head came up and was right in front of my face, and then at the side of my head.  "Is it going to try and bite my ear?  What kind of attack is that?  Has it been watching reruns of Mike Tyson fights?"

But that was it.  It kind of sniffed me a bit, I pet it on it's neck for a minute, and then it turned and walked away, followed by the donkey.

So for all of you real estate professionals out there that may someday run into a llama unexpectedly, be aware that that is what they do.  I talked to the owner later who explained that llamas like to sniff at your ear, and they make a determination of whether they like you or not based on that.  If they like you, they will just walk away or let you pet them.  If they don't like you, they will move back a few inches and spit in your face.  You DO NOT want that to happen, for reasons beyond the general annoyance of being spat on.  The owner said that the spit is just chewed up grass that lingers in their throats, but it stinks to high heaven, and takes forever to wash out of your clothes and hair.         

So in the end I was pretty happy that I had not been spit on, and gained acceptance from the llama community, and not injured a homeowners pet.  A good day, all in all.